High Eccentricity EOQ Total Cost Function Yields JIT Results
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Authors
Roach, Bill
Issue Date
2009-07-1
Type
Working paper
Language
en_US
Keywords
Eccentricity , Economic Order Quantity (EOQ) , Perishable inventory , Inventory control , Business logistics , Business mathematics
Alternative Title
Abstract
For perishable inventory, the hold cost H is much larger than anticipated by the classical EOQ formula, orders of magnitude larger. For perishable inventory, the EOQ total cost function is pointed rather than flat. This pointed-ness logically causes the EOQ model to yield JIT-like results. The pointed-ness (eccentricity) of the EOQ total cost curve depends solely on holding cost H and not annual demand D or batch cost S. D and S determine the level of the TC curve but not the shape.
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Citation
Publisher
Washburn University. School of Business